The new forecast sees the two-year government of Canada bond trading at around 0.66 per cent by the end of 2016, down from an original call of 0.98 per cent. National Bank expects the 10-year yield to trade around 1.73 per cent.

Low yields will match weaker economic growth, which National Bank forecasts will come in at no more than 0.9 per cent this year. That is one of the more bearish predictions among economists right now.

But while yields are expected to remain low, their gradual creep upward this year could conspire, along with rising spreads in riskier bonds, to tighten monetary conditions in Canada — adding further economic pressure.

“An increase in the yields of Canadas accompanied by a widening of risk premiums on corporate bonds would amount to a cocktail that would further straighten financial conditions and create headwinds for economic growth,” said National Bank economists in a note to clients. “This is a risk to keep an eye on.”

The good news is that it’s still a relatively low risk — for now.

“At this writing, corporate and provincial yield spreads to Canadas have widened substantially since last summer,” said the economists. “However, with Canada yields to maturity still depressed, the absolute yields of corporate bonds remain low by historical standards.”